What is a hardware wallet? How to find a suitable hardware wallet?

Various methods are used to maintain each asset. For example, to keep money and gold, we put them in a safe or put them in a bank safe deposit box. Similarly, there are different ways to store digital currencies. Some methods are simple and cheap, but risky, and others are expensive, but secure, like hardware wallets.

Hackers always use many strategies to steal users' inventory. On the other hand, human inadvertent mistakes have so far wasted millions of dollars of capital; Therefore, using the right strategy to secure assets is one of the main duties of digital currency investors. Meanwhile, until now, one of the best ways to store digital currencies has been using a hardware wallet.

In this article, we explain what a digital currency hardware wallet is, how it works, and what benefits it has. Also, we introduce the best hardware wallets out there. So stay with us until the end of the article.

What is a hardware wallet and how does it work?

Hardware wallet (hardware wallet) A physical device is specifically for Secure storage of digital assets designed. Hardware wallets Security features They have advanced features that significantly reduce the possibility of hacker attacks. The major part of the security of these wallets is because Private keys particle for direct object Offline they're keeping. wallet Ledger Nano S One of the most famous examples of hardware wallets is the one that looks a lot like a flash drive.

In general, a digital currency wallet is similar to a digital bank account, using which you can easily send, receive and manage your digital currencies.

Using a hardware wallet is one of the safe ways to store digital currencies. This means that hackers cannot access assets without the permission of the original owner of the asset.

Also, hardware wallets allow users to store a variety of digital assets offline without the need for a permanent Internet connection. For this reason, some people call hardware wallets “cold wallets”.

When you use online or software wallets, your wallet access key is stored online; So, if your wallet website gets hacked, there is a risk of losing your digital currencies. Fortunately, when you use a hardware wallet, this risk does not exist; Because in this type of wallet, offline storage is used.

In addition, hardware wallets have an additional PIN code to protect against unauthorized use; So if your hardware wallet is stolen or lost, no one can access your digital currencies without a PIN code.

Why do we need a hardware wallet?

Hardware wallets can be a good choice for digital currency users. These wallets minimize many risks beyond the control of users. For example, cryptocurrency hardware wallets minimize critical security gaps in cryptocurrency exchanges or malware that exploits zero-day vulnerabilities in mobile and desktop operating systems.

However, do not forget that hardware wallets are not completely secure. For example, in a security incident, hackers attacked the Ledger hardware wallet and, using a loophole, took control of the computers connected to the Ledger wallets and ran their malware on them. Here, we should also point out that these types of attacks are much more difficult than phishing scams and hacking software wallets.

Also, in the last few years, the security landscape and the strength of the structure of these wallets have improved a lot, and hardware wallets have become much easier to use. These types of wallets offer you the right combination of security and convenience.

Read more: Why hardware wallets aren't as secure as you think?

The difference between hardware wallets and hot wallets

In general, there are two types of wallets: one is a software wallet (hot wallet) and the other is a hardware wallet (cold wallet). Each of them has its own unique features and they have similarities to each other. Next, we review some of the differences between hardware and software wallets.

Storage mode

Although hardware and software wallets aim to store and increase the safety of investors' assets, the way they store them is different. A hardware wallet stores assets offline using physical media without an internet connection; While the software wallet stores the data on the computer.

Most people prefer a software wallet because of its ease of use and accessibility; But before you choose the right wallet, make sure the security of the asset storage mode.

security

Just because hardware wallets are more secure doesn't mean that software wallets aren't secure. However, wallets that store private keys on computers or smartphones leave users' balances vulnerable to a wide variety of hacker attacks. Malware can detect digital currency activities on these devices and drain users' balances.

Conversely, even if someone can physically get hold of your hardware wallet, they can't spend the assets despite the PINs; Because if the wrong PIN is entered several times, the device will automatically return to the factory settings.

Funds that are not used for spending, staking, lending or trading are best stored offline. A hardware wallet is a suitable means to achieve this goal; Even for users who do not have enough technical knowledge.

Read more: staking or staking; Full training + introduction of digital currency

Price

One of the main differences between software and hardware wallets is their price. Also, one of the determining factors in choosing a hardware or software wallet is its cost. It makes sense to consider the price difference; But it's worth noting that your digital assets are important; Especially if you have allocated a large amount of your capital to digital currencies, it is better to always try not to compromise their security for the sake of paying less.

Hardware wallets are more expensive than software wallets. Software wallets are usually free, and you can store your digital assets in often free apps with just your smartphone or computer.

access

Hardware wallets may seem more accessible than software wallets; But in reality it is not like that. Imagine you have stored your assets in your wallet in Germany and are traveling to the United States the following week. This means that if you don't take the wallet with you, you won't have access to your digital currencies until you return from your trip.

On the other hand, the software wallet is always available and you can have the software on your personal computer or tablet or smartphone; So, wherever you go, as long as there is internet access and electricity, your wallet remains accessible. All you need is your login details and you can send and receive your cryptocurrencies anywhere in the world in seconds.

How should we choose a hardware wallet?

To choose the right hardware wallet, consider the points mentioned in the following article. One of the hardware bitcoin wallets might be confusing and awkward for new users and very satisfying for more experienced users.

• Security features: Check if the wallet offers two-factor authentication and multi-signature? Does it have a backup feature like the recovery phrase (Seed) or not? These are the security requirements of hardware wallets.
• User interface and ease of use: Some wallets are more suitable for beginners and others for more advanced users. First, research about this topic and read the opinions of other users so that you don't regret after buying.
• Supported currencies: Before buying a wallet, make sure the wallet you are considering supports the digital currencies you plan to store. Not all wallets support all cryptocurrencies.
• Supported operating systems: Not all wallets are compatible with all operating systems; Therefore, check the compatibility of the wallet with your PC before purchasing.
• Platform compatibility: Can you connect the wallet to the exchanges you use all the time? Does the wallet work with your Dapp and DEX?
• Portability: Check out how easy it is for you to carry your wallet everyday. If you plan to use digital currencies daily and make your payments with them, a hardware wallet is not a good choice.
• the fame: The reputation and history of the wallet manufacturing company is very important; Therefore, before buying, check the opinions of customers and the authenticity of the company that made the wallet.

What should we do if we lose our hardware wallet?

One of the positives of using hardware wallets is that if your hardware wallet is lost, damaged, or even stolen, your digital assets are not lost.

All hardware wallets are sold with seed recovery terms, sometimes known as paper wallets. At the time of setting up the hardware wallet, the user is given a number (12 or 24) of recovery words, which is the backup copy of the wallet and must be noted and kept in a safe place. If the hardware wallet is stolen or damaged, simply enter those 12 or 24 words into the software wallet to regain access to the assets. This feature provides more peace of mind for users.

However, it is important to keep your recovery password in a safe place. If someone gets access to your recovery phrase, they may be able to withdraw your entire cryptocurrency. Many cryptocurrency users prefer to keep their cold wallet and recovery phrases in separate locations so that in case one is accidentally lost or compromised, the other remains in a safe place.

Advantages and disadvantages of hardware wallets

Cold wallets, like any other product in the world, have their advantages and disadvantages. Next, we will examine the important advantages and disadvantages of these wallets.

Advantages of hardware wallets

• Ability to control digital assets: Hardware wallets allow you to manage your private keys and take full ownership and control of your funds. In fact, no third party is involved in managing your capital.
• Maximum security: Hardware wallets have stood the test of time in terms of security and consumer satisfaction. When security experts report vulnerabilities in these wallets, developers are quick to fix the problem. Since private keys are always kept offline, they are immune to malware; Except when the device is defective.
• Backup options: If you lose your wallet, you can use the recovery phrase to regenerate your private key and regain access to your funds using another wallet.

Disadvantages of hardware wallets

• Initial cost: There is no doubt that these wallets are expensive to use. The reality is that hardware wallets are expensive.
• User experience: The process of setting up and using hardware wallets can be very difficult for beginners; Hence, software wallets are much easier to use than hardware wallets.
• Difficulty of use for day traders: Hardware wallets are not convenient for everyday transactions; Because they require you to physically connect them to the device before accessing your crypto. Hardware wallets are suitable for those who plan to hold their assets long-term, not for day-to-day trading. If you are a trader who swings many times a day and opens many buy and sell positions, using a hardware wallet will not make sense.

Introducing 5 Bitcoin hardware wallets and digital currencies

There are many hardware wallets in the market, all of which provide suitable features to users. Next, we introduce some examples of these wallets.

Keep Key

This wallet is the right choice for those who are looking for a wallet with a simple user interface. Keep Key is HD wallet; That is, your private keys are generated and stored hierarchically. This allows for multiple levels of security and easy backups. Keep Key supports more than 40 currencies and its price varies between 50 and 80 dollars.

Trezor

Trezor is one of the most secure wallets available and supports a wide range of digital currencies. There are several versions of this hardware wallet, including Trezor One and Model T. Trezor T uses new encryption methods to protect digital assets and is quite expensive compared to other hardware wallets at around $250.

Coolwallet Pro

Cool Wallet Pro is developed by CoolBitX and is a hardware wallet that provides unparalleled security for your digital assets. The Cool Vault is built with Enhanced Secure Element (EAL 6+). The existence of several biometric security features in this wallet makes it a suitable option. CoolWallet supports many advanced features to facilitate support for DeFi protocols, airdrops, NFT collections, decentralized applications, and other emerging products and services. The price of this wallet is about 100 dollars.

SafePal

Safe Pal is another hardware wallet that supports multiple cryptocurrencies. Security and ease of use have made this wallet more popular. Safe Pal supports thousands of digital currencies and about 20 blockchain networks. Safe Pal is secure against hacking attacks and has a self-destruct mechanism against offline brute force attacks. Buying Safe Pal hardware wallet costs about 50 dollars.

Ledger

Ledger is a popular brand of hardware wallet that offers different models to fit different budgets and needs of users. Ledger Nano X hardware wallet supports more than 1,000 digital currencies. It should be said that we put Ledger at the bottom of our list for several reasons. This company not only had many margins in 2020; But he also witnessed the theft of sensitive consumer data. Also, recently the said wallet has suffered more margins due to the problems caused by the collapse of FTX. The price of wallets of this brand varies between 80 and 150 dollars.

Conclusion

If you have allocated a large part of your capital to digital currency or plan to keep your assets long-term, and even simpler, if you think that the security of software wallets is not enough for you, a hardware wallet is the right choice. In fact, the limitations of hardware wallets are insignificant compared to the many possibilities they provide to users.

There is a wide range of hardware wallets in the digital currency market, and in this article, we introduced 5 examples of them. Note that the wallet that is suitable for your colleague may not be suitable for you. We recommend that you pay attention to your priorities, wallet security, supported currencies, and the reputation and authenticity of the manufacturing company when choosing the right hardware wallet.